limited company Articles

Autumn Budget Could Cost Contractors
marketing | 21 September 2020
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Reports suggest that the Chancellor Rishi Sunak could increase limited company contractor taxes to help reduce Britain’s COVID-19 debt.

The Autumn Statement isn’t expected until mid-to-late November at the earliest, but the rumour mill is already beginning to swirl - and tax hikes for companies and contractors look to be on top of the Chancellor’s agenda.

Contractors Stung by Dividend Allowance Cut

After wrapping up their tax affairs for the 2018/19 tax year, many limited company contractors will only now be waking up to the reality of the 2018 dividend allowance cut, which saw the tax-free dividend allowance drop from £5,000 to £2,000.

In 2018/19, this tax-free allowance was applied to the first £2,000 of dividend income. Above £2,000, dividends are taxed at a flat rate according to the tax band they fall into.

Private Sector IR35 Reforms: What It Means for You
marketing | 30 October 2018
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The Treasury released new guidance on off-payroll working (IR35) in the private sector yesterday, following the Chancellor’s Budget speech.

Following a consultation on the rules, some commentators expected IR35 reforms to take effect from next year. But the policy paper reveals that the changes will be introduced in April 2020, giving businesses more time to prepare for the reforms

We’ve combed through the policy document, picking out the key points so you can understand how the changes will affect you.

What should contractors pay themselves?
marketing | 16 September 2017
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Contractor pay is important to us. Many contractors work long hours and have to perform a lot of additional administration that isn’t involved in other lines of work. So it is important that the financial rewards match the burdens of the job.

Unfortunately, the tax framework for contractors is something of a minefield. Recognising the most efficient way to draw income from your contracts is far from simple.

Between umbrella contracting, dividends and IR35 legislation, it can be difficult to know the best way of doing things. We hope to clear it up in this blog post.

AUTUMN STATEMENT REVIEW

The Chancellor’s first Autumn Statement contained some pretty eye-watering sums. The estimated cost of Brexit at £58.7bn and an extra £122bn of borrowing in this parliament are two of the biggest.

There were some positive numbers though. £26bn to fund investment in housing, transport, digital technology and research and development will prove valuable to contractors in some of these industries.

Others, meanwhile, will be left counting the cost of tax increases. Here are seven of the most important points for contractors and limited company owners.

Support package announced for self-employed, but it won’t help everyone

Most of Britain’s five million self-employed workers breathed a sigh of relief yesterday when the government announced that they would receive taxable grants to make up for lost income during the coronavirus pandemic.

Chancellor Rishi Sunak announced that freelancers and contractors would be able to claim up to 80% of their profits from the state if they could prove that they had been adversely affected. But the grants will be capped at £2,500 per month and not everyone will be able to claim them - including contractors that work through a limited company.

In this blog post, we include more details about the support package and who is eligible to receive it. There’s also some good news for limited company contractors that can’t claim the self-employed support.

What expenses can limited company contractors claim

If you contract through a limited company, there are certain expenses that you can claim against your income to reduce your tax liability.

If your limited company makes £50,000 and you claim back £10,000 in allowable expenses, the taxable profit will be £40,000.

There are some rules governing what expenses limited company contractors can claim.

How Much Will April Dividend Cut Cost You?

A cut in dividend allowance will cost some contractors more than £1,000 per year when it takes effect from April.

The allowance on dividends will be cut from £5,000 to £2,000 as the chancellor continues his raid on self-employed finances.

This means that individuals will not pay taxes on the first £2,000 of dividend income, regardless of what non-dividend income they have.

Tool: Check your IR35 status before April
marketing | 7 March 2017
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HMRC has launched a new tool designed to help contractors, and those that engage them, decide a worker’s IR35 status.

But with less than a month to go before a fundamental change in the way IR35 rules are applied, some experts have found cause for concern with the Employment Status Indicator tool.

A contractor’s IR35 status is all about whether the contract they are working on should be considered employed or self-employed for tax purposes. The Employment Status Service is supposed to give HMRC’s view of whether a contract is inside or outside IR35.

This will be of particular interest to limited company contractors working in the public sector because, from April, it will be the public sector organisations that decide on IR35 status instead of the individual. 

PSC register for limited companies
marketing | 16 February 2016
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A new regulation that requires companies to create a ‘Register of People with Significant Control’ (PSC register) comes into force on 6 April 2016.

The changes should not be too strenuous for companies, but it is important that they are aware and fulfil their obligations in line with the new rules.

What is a PSC register?

The PSC register forms part of the reform to UK company law that was introduced in the Small Business, Enterprise and Employment Act 2015.  

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